Business Directories

Japan's LDP surges back to power

Tokyo, December 16, 2012

Japan's conservative Liberal Democratic Party (LDP) surged back to power in an election on Sunday just three years after a devastating defeat, giving ex-Prime Minister Shinzo Abe a chance to push his hawkish security agenda and radical economic recipe.

An LDP win will usher in a government committed to a tough stance in a territorial row with China, a pro-nuclear energy policy despite last year's Fukushima disaster and a potentially risky prescription for hyper-easy monetary policy and big fiscal spending to beat deflation and tame a strong yen.

Exit polls by television broadcasters showed the LDP winning nearly 300 seats in parliament's powerful 480-member lower house, while its ally, the small New Komeito party, looked set to win about 30 seats.

That would give the two parties the two-thirds majority needed to over-rule parliament's upper house, where they lack a majority and which can block bills, which would help to break a policy deadlock that has plagued the world's third biggest economy since 2007.

"What's first and foremost is to achieve an economic recovery and pull Japan out of deflation," Abe, expected to be confirmed on Dec. 26 as the next prime minister, said on live television.

Analysts said that while markets had already pushed the yen lower and share prices higher in anticipation of the LDP's decisive victory, stocks could rise further and the yen weaken if the "super majority" was confirmed.

Top executives of the LDP and the New Komeito confirmed that they would form a coalition. "The basis of course is a coalition between the LDP and the New Komeito. But if there's room to cooperate with Japan Restoration Party, we need to do so," said LDP Secretary-General Shigeru Ishiba, referring to a new right-leaning party that was set to pick up about 46 seats.

"I think there is room to do this in the area of national defence," he said, referring to cooperation with the Japan Restoration Party. The New Komeito is more moderate than the LDP on security issues.

Exit polls showed Prime Minister Yoshihiko Noda's Democratic Party of Japan (DPJ) winning only 65 seats, just over a fifth of its tally in 2009.

The DPJ, which swept to power in 2009 promising to pay more heed to consumers than companies and reduce bureaucrats' control over policymaking, was hit by defections just before the vote.

Party executive Kohei Otsuka told NHK that Noda would likely have to quit the party leadership over the defeat, in which several party heavyweights lost their seats.

Many voters had said the DPJ failed to meet its election pledges as it struggled to govern and cope with last year's huge earthquake, tsunami and nuclear disaster, and then pushed through an unpopular sales tax increase with LDP help.

Voter distaste for both major parties has spawned a clutch of new parties including the Japan Restoration Party founded by popular Osaka Mayor Toru Hashimoto. A dozen parties fielded candidates, confusing many voters.

ABE TO RETURN

LDP leader Abe, 58, who quit as premier in 2007 citing ill health after a troubled year in office, has been talking tough in a row with China over uninhabited isles in the East China Sea, although some experts say he may temper his hard line with pragmatism once in office.

The soft-spoken grandson of a prime minister, who would become Japan's seventh premier in six years, Abe also wants to loosen the limits of a 1947 pacifist constitution on the military, so Japan can play a bigger global security role.

China's official Xinhua news agency said in an editorial Japan's winning party should formulate its foreign policy with a long-term perspective to repair ties with neighbours.

The news agency said it was a "troubling sign" that some parties in the election had promised to take a tough stand on territorial disputes and increase military spending. - Reuters